Angry Customers Are Gifts for Financial Marketers

Moments of Truth

“I’ve been with the Bank X for 12 years, but they made a mistake a while ago. When I called their 800 number, the customer service rep was unhelpful and blamed the problem on me. When I complained to a supervisor, she just said ‘That’s the way the system works.’ I told them I would be closing my account and posting my complaint anywhere I could …and they still don’t care!”

Hey, we all make mistakes. No matter how much your financial institution commits itself to delivering the best service possible, everyone eventually screws up some time. The good news is that every mistake, error and negative customer experience can be a huge brand-building opportunity… or it can turn into a total PR disaster, depending entirely on how you respond.

Handle these sticky situations well and you can turn a disgruntled person into someone who runs around singing your praises as a customer for life. Mess it up and you’ll have an unhappy customer who might wreak havoc on your organization. It’s up to you. Your ability to resolve problems and address complaints determines whether customers become evangelists for your brand or nasty detractors.

As noted in The Profitable Art of Service Recovery, “Even the best service companies can’t prevent the occasional late flight, burned steak, or missed delivery. Errors are inevitable. But dissatisfied customers are not. While companies may not be able to prevent all problems, they can learn to recover from them. A good recovery can turn angry, frustrated customers into loyal ones. It can, in fact create more goodwill than if things had gone smoothly in the first place.”

“Banks must reexamine their service recovery processes if they are to address the lapses that turn disgruntled customers into former ones.”
— Marukel Nunez,
McKinsey Quarterly

If the popular business maxim is correct and it indeed costs five times as much to get a new customer as to keep an existing customer, then it makes sense to capitalize on complaints with an effective service recovery strategy. Unfortunately, complaining customers are often viewed as ‘the enemy.’

“A good recovery process can turn angry, frustrated members into loyal ones,” says Dan Schoenherr, a credit union consultant. “It can create more goodwill than if things had gone smoothly in the first place.”

Being a Hero Instead of The Villain

The airline industry can teach financial institutions much about service recovery. Virgin Atlantic had a passenger whose grievances about bad airline food went viral after a leading UK publication heralded his missive the “world’s best complaint letter.” Sir Richard Branson, Virgin Atlantic’s CEO, personally called the passenger requesting his help choosing the menu for future flights. Virgin Atlantic had successfully turned a critic into a fan.

And at Singapore Airlines, it is a practice to take special care of a disgruntled passenger, ensuring that he is a convert by the end of the brand engagement.

Of course not every airline adheres to a service recovery strategy. After spending nearly a year seeking compensation for a guitar damaged by baggage handlers, musician Dave Carroll had enough. He decided to spank United Airlines in a trilogy of satirical YouTube music videos, including “United Breaks Guitars” which has been viewed nearly 10 million times.

How to Convert Detractors Into Brand Advocates with Service Recovery

So what can you do when you make a mistake? It’s simple. You respond with an apology, empathy, responsiveness and assurance. Just follow these steps.

1. Apologize.
You will be forgiven, but usually only once. Don’t make the same mistake twice.

2. Listen and empathize.
Successful recovery is a psychological exercise. Treat customers in a way that suggests the company cares about the problem, the customer’s inconvenience, and making things right. One of the most important steps is simply listening. Let customers vent their frustrations and blow off some steam. It’s essential to let the customer explain their story and describe the impact of the failure.

3. Fix the problem.
Singapore Airlines follows a simple set of rules to fix customer complaints: If it’s simple, give it to the customer. If the thing that was miscommunicated is easy to do or follow through with, just do it. If it’s complicated, try to compromise.

4. Offer atonement.
Saying you’re sorry isn’t enough. What seems to really piss some customers off is their belief that their situation will have no effect on the company’s systems. What people want is some sort of assurance that their problem won’t happen again — to them, as well as to others.

5. Follow up
Once the problem has been fixed, make sure you follow up. Call the customer and ask, “Have we fixed everything for you?” and “What else can we do for you?” Make sure they are satisfied. This final step seals the experience as positive, and ensures the customer understands you are a truly service-oriented organization.

Where ‘Service Recovery’ Breaks Down

When it comes to a company recovering from a poor service experience, there are some important consumer hot buttons to keep in mind. Once someone brings a problem to your attention, a new — and much higher — set of expectations kick in. They expect to:

  • Receive an explanation of how a problem happened.
  • Be told how long it will take to resolve a problem.
  • Be given progress reports if a problem cannot be solved immediately.
  • Be given useful alternatives if a problem cannot be resolved.
  • Be allowed to talk to someone in authority.
  • Be contacted promptly once the problem is resolved.
  • Be called back when promised.
  • Know who to contact in the future.
  • Be told about ways the customer’s situation might be used to prevent future problems.

There are many internal challenges — even some roadblocks — making the implementation of a successful service recovery program difficult. Culturally, some organizations may pretend to strive for “zero failures” while ignoring the operational changes required to accomplish such a goal (e.g., empowering employees). Other financial institutions prefer to suppress rather than circulate negative feedback. And employees are often encouraged with incentives to focus on customer acquisition vs. customer retention. Furthermore, service recovery demands a reward structure that gives employees positive reinforcement for solving problems and pleasing customers, and not just for reducing the number of complaints.

Training & Empowering Staff

training and empowerment is the backbone of service recovery. You must allow your employees to solve a customer’s problem on the spot. You also must encourage your employees to give the customer something of value, something that is so powerful they not only will keep coming back to you but will tell everyone they know about it, as well.

“All employees should be trained to follow the above five steps. Use real examples of complaints in the training. How would you handle it? What could we have done better? Make sure employees understand the extent of their empowerment.”
Dan Schoenherr, Schoenherr Consulting—Complaint-Recovery-Process-For-Credit-Unions&id=2755975

Benefits & Measurements

How companies manage problems and resolve complaints is one of the most highly correlated variables associated with overall satisfaction and customer loyalty. A service recovery strategy can increase positive word-of-mouth mentions and improve retention rates (aka reduce attrition rates) which thereby increases customer lifetime value.

”63% of customers who do take the time to complain are not completely satisfied with the bank’s response to their problem.”
— Technical Assistance
Research Programs

Conversely, those who had a negative experience during the previous 24 months kept 4% less with the bank than did those who had a positive experience.

Furthermore, unresolved problems have a particularly negative impact on both continued product use and word-of-mouth recommendations to others. Dissatisfied customers tell far more people about their experience than do routinely satisfied customers. Studies have shown that for every 100 dissatisfied consumers, four will formally complain, 91 will tell 8-10 others, and five will tell 20 others.

For your financial institution, calculating the cost/benefit of a service recovery customer retention strategy is easy. Just start with these three questions:

  1. How frequently do service failures occur?
  2. How many service failures result in a lost customer?
  3. How much does it cost to lose a customer?

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